To Wave Or Not To Wave? Order Release Policies for Warehouses with an Automated Sorter

Wave-based release policies are prevalent in warehouses with an automated sorter, and take different forms depending on how much waves overlap and whether the sorter is split for operating purposes. Waveless release is emerging as an alternative policy adopted by an increasing number of firms. While that new policy presents several advantages relative to waves, it also involves the possibility of gridlock at the sorter. In collaboration with a large US online retailer and using an extensive dataset of detailed flow information, we first develop a model with validated predictive accuracy for its warehouses operating under a waveless release policy. We then use that model to compute operational guidelines for dynamically controlling the main parameter of its waveless policy, with the goal of maximizing throughput while keeping the risk of gridlock under a specified threshold. Secondly, we leverage that model and dataset to perform through simulation a performance comparison of wave-based and waveless policies in this context. Our waveless policy yields larger or equal throughput than the best performing wave-based policy with a lower gridlock probability in all scenarios considered. Waveless release policies thus appear to merit very serious consideration by practitioners. Facilities using a non-overlapping wave policy should also consider overlapping waves or a split sorter policy

Temporary and Permanent Buyout Prices in Online Auctions

Increasingly used in online auctions, buyout prices allow bidders to instantly purchase the item listed. We distinguish two types: a temporary buyout option disappears if a bid above the reserve price is made; a permanent one remains throughout the auction or until it is exercised. In a model featuring time-sensitive bidders with uniform valuations and Poisson arrivals but endogenous bidding times, we focus on finding temporary and permanent buyout prices maximizing the seller's discounted revenue, and examine the relative benefit of using each type of option in various environments. We characterize equilibrium bidder strategies in both cases and then solve the problem of maximizing seller's utility by simulation. Our numerical experiments suggest that buyout options may significantly increase a seller’s revenue. Additionally, while a temporary buyout option promotes early bidding, a permanent option gives an incentive to the bidders to bid late, thus leading to concentrated bids near the end of the auction.Singapore-MIT Alliance (SMA

National Drug Stockout Risks and the Global Fund Disbursement Process for Procurement

Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/137408/1/poms12662_am.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/137408/2/poms12662-sup-0001-Appendix.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/137408/3/poms12662.pd

Taking stock: protocol for evaluating a family planning supply chain intervention in Senegal.

BACKGROUND: In Senegal, only 12% of women of reproductive age in union (WRAU) were using contraceptives and another 29% had an unmet need for contraceptives in 2010-11. One potential barrier to accessing contraceptives is the lack of stock availability in health facilities where women seek them. Multiple supply chain interventions have been piloted in low- and middle-income countries with the aim of improving contraceptive availability in health facilities. However, there is limited evidence on the effect of these interventions on contraceptive availability in facilities, and in turn on family planning use in the population. This evaluation protocol pertains to a supply chain intervention using performance-based contracting for contraceptive distribution that was introduced throughout Senegal between 2012 and 2015. METHODS: This multi-disciplinary research project will include quantitative, qualitative and economic evaluations. Trained researchers in the different disciplines will implement the studies separately but alongside each other, sharing findings throughout the project to inform each other's data collection. A non-randomised study with stepped-wedge design will be used to estimate the effect of the intervention on contraceptive stock availability in health facilities, and on the modern contraceptive prevalence rate among women in Senegal, compared to the current pull-based distribution model used for other commodities. Secondary data from annual Service Provision Assessments and Demographic and Health Surveys will be used for this study. Data on stock availability and monthly family planning consultations over a 4-year period will be collected from 200 health facilities in five regions to perform time series analyses. A process evaluation will be conducted to understand the extent to which the intervention was implemented as originally designed, the acceptability of third-party logisticians within the health system and potential unintended consequences. These will be assessed using monthly indicator data from the implementer and multiple ethnographic methods, including in-depth interviews with key informants and stakeholders at all levels of the distribution system, observations of third-party logisticians and clinic diaries. An economic evaluation will estimate the cost of the intervention, as well as its cost-effectiveness compared to the current supply chain model. DISCUSSION: Given the very limited evidence base, there is an important need for a comprehensive standardised approach to evaluating supply chain management, and distribution specifically. This evaluation will help address this evidence gap by providing rigorous evidence on whether private performance-based contracting for distribution of contraceptives can contribute to improving access to family planning in low- and middle-income countries

Optimization-based auctions and stochastic assembly replenishment policies for industrial procurement

Thesis (Ph.D.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2000.Includes bibliographical references (leaves 103-112).This thesis describes two applications of Operations Research to the field of industrial procurement, addressing problems encountered in supplier selection and supplier control, respectively. The first part addresses the problem of designing multi-item procurement auctions in capacity-constrained environments. Using insights from classical auction theory, we construct an optimization based auction mechanism ("Smart Market") relying on the dynamic resolution of a linear program minimizing the buyer's cost under the suppliers' capacity constraints. Based on the optimal allocation corresponding to each set of bids, suppliers can respond by modifying their offers, giving rise to a dynamic competitive bidding process. A first contribution of our work is the solution we develop to assist suppliers, a bidding suggestion device based on a myopic best response (MBR) calculation solving an inverse optimization problem. The second main contribution is the analytical study of the bid profile sequences arising in this smart market within a game-theoretic framework assuming linear costs for the suppliers. Under a particularly weak behavioral assumption and some symmetry requirements, we establish an explicit upper bound for the winning bids when the auction terminates as a function of the market environment parameters. This bound constitutes a performance guarantee from the buyer's perspective, and provides insights on how capacity constraints affect relative market power. We then formulate a complete behavioral model and solution methodology based on the MBR rationale and the concept of local Nash Equilibrium, and argue its realism. We derive analytically some structural and convergence properties of the MBR dynamics in the simplest non-trivial market environment, suggesting further possible design improvements, and obtain insights on market behavior, efficiency and incentive compatibility issues through numerical simulations. In particular, experiments tend to show that suppliers might be relied upon to provide their own capacity information when procurement contracts are properly designed. The second part is motivated by a strategic challenge faced in particular by electronic goods manufacturing companies. Because most of their assembly operations are highly automated, procurement delays typically account for most of the total production lead-time, and have a major impact on inventory costs. However, in an increasingly global outsourcing environment, these delays can be both long and uncertain. This leads us to examine the problem of optimally procuring components in a single-product stochastic assembly system. We consider a model where product demand follows a stationary Poisson process, assembly is instantaneous, and unsatisfied demand is backordered. The suppliers are uncapacitated and the components have independent but non-identically distributed stochastic procurement delays. The following class of policies is considered: The finished goods inventory is initially filled to its base stock level, and each customer order triggers a replenishment order for a component after a component-dependent postponement lead time. The objective is to minimize the sum of holding and backorder costs in steady-state over this class of replenishment policies. To keep the analysis tractable, we assume that no mixing occurs between component orders (synchronization assumption). Combining classical queueing network theory with original results concerning a distributional property we call closure under maximization and translation (CMT), we obtain a near-optimal solution in closed-form. We then demonstrate through simulation, using industrial data from a Hewlett-Packard facility, that the policy we derived significantly outperforms other policies commonly used in practice. In addition, we show that it is quite robust with respect to various model assumptions, except the synchronization one. We thus conclude that this work is potentially amenable to implementation in the settings where this assumption is not exceedingly demanding. Moreover, we believe that the CMT distributions we introduce could also prove useful in a variety of applications beyond the context of supply chains, such as project management, reliability analysis, and the study of natural extreme phenomena.by Jérémie Gallien.Ph.D

Dynamic Mechanism Design for Online Commerce

Motivated by electronic commerce, this paper is a mechanism design study for sellers of multiple identical items. Inthemarketenvironmentweconsider, participants are risk-neutral and time-sensitive, with the same discount factor; potential buyers have unit demand and arrive sequentially according to arenewal process; and valuations are drawn independently from the same regular distribution. From the Revelation Principle, wecanrestrictourattentionto directdynamicmechanismstakinga sequence of valuations and arrival epochs as a strategic input. We define two properties (discreteness and stability), and prove that under a regularity assumption on the inter-arrival time distribution, we may at no cost of generality consider only mechanisms satisfying them. This effectively reduces the mechanism input to a sequence of valuations, allowing us to formulate the problem as a dynamic program (DP). Because this DP is equivalent to a well-known infinite horizon asset-selling problem, we can finally characterize the optimal mechanism as a sequence of posted prices increasing with each sale. Our numerical study indicates that, with uniform valuations, the benefit of dynamic pricing over a fixed posted price may be small. Besides, posted prices are preferable to online auctions for a large number of items or high interest rate, but in other cases auctions are close to optimal and significantly more robust

Dynamic Mechanism Design for Online Commerce

Motivated by electronic commerce, this paper is a mechanism design study for sellers of multiple identical items. In the market environment we consider, participants are risk neutral and time-sensitive, with the same discount factor; potential buyers have unit demand and arrive sequentially according to a renewal process; and valuations are drawn independently from the same regular distribution. From the Revelation Principle, we can restrict our attention to direct dynamic mechanisms taking a sequence of valuations and arrival epochs as a strategic input. We define two properties (discreteness and stability), and prove that under a regularity assumption on the inter-arrival time distribution, we may at no cost of generality consider only mechanisms satisfying them. This effectively reduces the mechanism input to a sequence of valuations, allowing us to formulate the problem as a dynamic program (DP). Because this DP is equivalent to a well-known infinite horizon asset-selling problem, we can finally characterize the optimal mechanism as a sequence of posted prices increasing with each sale. Our numerical study indicates that, with uniform valuations, the benefit of dynamic pricing over a fixed posted price may be small. Besides, posted prices are preferable to online auctions for a large number of items or high interest rate, but in other cases auctions are close to optimal and significantly more robus

Dynamic Mechanism Design for Online Commerce

Motivated by electronic commerce, this paper is a mechanism design study for sellers of multiple identical items. In the market environment we consider, participants are risk neutral and time-sensitive, with the same discount factor; potential buyers have unit demand and arrive sequentially according to a renewal process; and valuations are drawn independently from the same regular distribution. From the Revelation Principle, we can restrict our attention to direct dynamic mechanisms taking a sequence of valuations and arrival epochs as a strategic input. We define two properties (discreteness and stability), and prove that under a regularity assumption on the inter-arrival time distribution, we may at no cost of generality consider only mechanisms satisfying them. This effectively reduces the mechanism input to a sequence of valuations, allowing us to formulate the problem as a dynamic program (DP). Because this DP is equivalent to a well-known infinite horizon asset-selling problem, we can finally characterize the optimal mechanism as a sequence of posted prices increasing with each sale. Our numerical study indicates that, with uniform valuations, the benefit of dynamic pricing over a fixed posted price may be small. Besides, posted prices are preferable to online auctions for a large number of items or high interest rate, but in other cases auctions are close to optimal and significantly more robustDynamic Pricing, Fixed Posted Price, Online Auctions,